South Sacramento group wins $1.5 million in lawyer fees – but may not see it

A California Public Utilities Commission judge awarded a south Sacramento neighborhood association nearly $1.5 million in attorney fees this month after the group defeated a proposal to store natural gas beneath their working-class neighborhood.

The Avondale/Glen Elder Neighborhood Association and its attorneys, however, are unlikely to see the money because the company formed for the natural gas project may be on the brink of bankruptcy. But advocates say the award sends a message to utility companies, and could encourage other grassroots organizations to take on causes that require expensive litigation.

“This should help other similarly situated communities take on big challenges. It’s surprisingly gratifying,” said Colin Bailey, a former attorney for Legal Services of Northern California who led the case.

The Nov. 4 judgment marks the final chapter in a five-year fight by neighbors to block the project over concerns about gas leakages. And it comes 16 months after the PUC in a 3-2 vote rejected a plan by Sacramento Natural Gas Storage LLC to store 7.5 billion cubic feet of natural gas beneath more than 700 homes in southeast Sacramento.

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The majority of the judgment would go to Legal Services of Northern California, a legal aid organization that represented the association along with the law firm then known as Remy, Thomas, Moose & Manley.

“We took it on pro bono. Our objective was to assist the community. Fees were not a motivation,” said Christopher Butcher, who represented the neighborhood association. “But this award would be very meaningful to Legal Services.”

Legal Services of Northern California has seen its budget slashed in recent years as a result of government tightening. The legal aid group, which operates on $11 million annually, receives most of its funding from public grants.

Attorney John Diepenbrock, who represented Sacramento Natural Gas, confirmed that the company’s assets are being administered by a third party. “Sacramento Natural Gas has not yet dissolved from a legal standpoint,” he said.

“If they do in fact declare bankruptcy, we would evaluate our options at that time,” said Stephen Goldberg, an attorney for Legal Services.

Company president Donald Russell did not respond to a request for comment.

According to PUC regulations, “the specific utility subject to the proceeding is responsible for the payment of intervenor compensation.”

Sacramento Natural Gas Storage LLC first sought approval from the PUC in 2007 to store gas in a sandstone formation 3,800 feet below the Avondale/Glen Elder neighborhood in southeast Sacramento. The site, a former Florin gas field, held natural gas that was extracted until 1987, when the supply was depleted.

The company offered $500 signing bonuses and ongoing payments to 760 property owners whose homes were above the storage site. The Sacramento Metropolitan Utility District had signed on to use part of the storage facility.

Sacramento city leaders at one point sought assurances that it would have the funding and resources needed to respond to a potential disaster at the storage site.

The leakage risk was considered significant and unavoidable because of the potential for disaster, according to a final environmental impact report.

The huge natural gas pipeline explosion in San Bruno in September 2010 likely played a role in the PUC’s decision, Avondale/Glen Elder representatives said. Eight people were killed in that incident.